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Point of Revenue Recognition

The following independent situations require professional judgement for determining when to recognize revenue from the transaction. Identify point of revenue recognition.

a). Southwest Airlines sells you an advance-purchase airline ticket in September for your flight home at Christmas.

b). Ultimate Electronics sells you a home theatre on a "no money down, no interest, and no payments for one year" promotional deal.

c). The Toronto BLue Jays sell season tickets online to games in the Skydome. Fans can purchase the tickets at any time, although the season doesn't officially begin until April. The major league baseball season runs from April through October.

d). You borrow money in August from RBC Financial Group. The loan and the interest as repayable in full in November.

e). In August, you order a new sweater from Sears using its online catalog. The sweater arrives in September, and you charge it to your Sears credit card. You receive and pay the Sears bill in October.

Solution Preview

a. Airline tickets have revenue recognition when the flight has been completed, thus at Christmas.

b. Ultimate Electronics will recognize revenue at ...

Solution Summary

The following independent situations require professional judgement for determining when to recognize revenue from the transaction. Identify point of revenue recognition.

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